We hear all this talk about how important it is for homeowners to stay current on their mortgages whilst in the middle of a short sale transaction. There has been talk about how after homeowners sell their homes for less than the balance owed, they’ll be eligible for financing a purchase again, immediately, in some cases.
However, as short sale agents, our seller clients are often turned down for short sales because “they do not qualify as having a financial hardship”.
Wait a minute. Isn’t the purpose of a short sale to AVOID foreclosure? As responsible homeowners, they foresee that they won’t be able to afford their mortgages for much longer, which is why they put their short sale home on the market in the first place! Inevitably, these seller clients are pushed into becoming delinquent on their mortgages by short sale lenders who turn down their short sales initially after insisting these homeowners had no financial hardship.
Although we’d never advise a homeowner to stop making payments on their mortgages, we can cite our experience in dealing with short sale lenders. Our experience has indicated to us time and time again that unless a borrower stops paying, the short sale lender will pay them little mind. The way I see it, as long as a lender is getting their money every month, they have no incentive to agree to a short sale.
If a seller decides to stop paying their mortgage, we let them get that bit of advice from their accountant or attorney, NEVER from us. In many cases, a lender will come right out and tell a borrower that unless they’re delinquent on their mortgage, they won’t be considered for a short sale.
Here’s a kicker:
Do you really think that Bank of America or Chase holds your loan? In many cases, Bank of America or Chase are just the entities “servicing” the loan for an investor. The “investor” could be anybody — a conglomerate out of China or Germany or a trust where many generations of a family’s money is invested. The “investors” are the ones who make the rules about whom to approve for a short sale and whom to turn down. They don’t give a hoot about who you are or what a great person you are – - they are NUMBERS-DRIVEN only. All they care about is the money. (Well, you would too if you were them, yes?)
Smaller, local lenders are the best to work with in short sale transactions. Lenders such as Fremont Bank and Bank of the West are a couple of my favorites. They’re faster, more responsive and more sensitive to the borrowers’ plight. Also, the representatives of these smaller local banks have a higher likelihood of having to look their customers in the eye.
If you need assistance with your mortgage, there are several options available which may help. CLICK HERE for more info. Debt forgiveness protections expire this year so it’s a good idea to at least explore your options now…